Restaurateur admits insider trading

Benihana chain's founder faces 12-18 months in jail

August 24, 1999|By BLOOMBERG NEWS

NEW YORK -- Rocky Aoki, founder of the Benihana Japanese restaurant chain, pleaded guilty yesterday to profiting from a tip that Spectrum Information Technologies Inc. was about to hire former Apple Computer Inc. chief John Sculley.

The 60-year-old restaurateur was charged last year with insider trading by the U.S. attorney in Brooklyn, N.Y. His guilty pleas to four criminal counts of insider trading makes him eligible for a reduced prison sentence of 12 to 18 months, instead of a maximum of 10 years, prosecutors said.

Aoki, appearing before U.S. Magistrate Judge Marilyn Go, confessed to buying 125,000 Spectrum shares between Oct. 13 and Oct. 15 on a tip from Donald Kessler, who was promoting the tiny company in Purchase, N.Y. By selling the shares after Spectrum announced Sculley's hiring, he made $346,000, Aoki said.

"I knew that what I did violated the law and I deeply regret my participation in these activities," Aoki said.

Benihana, which is based in Miami, was founded by Aoki in 1964. He gave up his 51 percent interest in the Asian restaurant chain and resigned as chairman after he told the company that he was under investigation. Benihana owns 51 teppenyaki and sushi restaurants, and has agreed to buy three New York City sushi restaurants from Haru Holding Co.

Aoki is still a $500,000-a-year consultant to the restaurant company, said Eric Corngold, securities-fraud prosecutor for the U.S. attorney's office.

Ira Sorkin, Aoki's attorney, said he may try to reduce Aoki's sentence because his client is ill. Aoki told the magistrate yesterday that he is on numerous medications for hepatitis and diabetes.